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The importance of the bank-lending channel in Estonia: evidence from micro-economic data

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Author Info
Reimo Juks ()
Abstract

The paper studies the importance of the bank-lending channel in Estonia. The results from the descriptive evidence suggest that there is a significant share of bank dependent borrowers in Estonia, but the impact of a monetary policy shock on the loan supply of banks seems to be ambiguous. The empirical analysis provides evidence in favour of the bank-lending channel in Estonia. First, well-capitalized banks seem to experience a smaller outflow of deposits after a monetary contraction. Second, the liquidity position of banks seems to be an important determinant of the loan supply suggesting that more liquid banks are able to maintain their loan portfolios, while less liquid banks must reduce their loan supply after a monetary policy contraction. This finding is consistent with the evidence for the euro area, where liquidity is also the most important determinant of the loan supply.

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Publisher Info
Paper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number 2004-6.

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Length: 38 pages
Date of creation: 13 Nov 2004
Date of revision: 11 Nov 2004
Publication status: published
Handle: RePEc:eea:boewps:wp2004-06

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Postal: Estonia bld. 13, 15095 Tallinn, ESTONIA
Phone: +3726680719
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Postal: Estonia bld. 13, 15095 Tallinn, ESTONIA
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Related research
Keywords: bank lending channel; monetary policy transmission;

Find related papers by JEL classification:
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Köhler, Matthias & Hommel, Judith & Grote, Matthias, 2006. "The Role of Banks in the Transmission of Monetary Policy in the Baltics," ZEW Discussion Papers 06-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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